Manhattan rents hit another record with more increases to come

[NEW YORK] Manhattan rents hit a record high for the fourth time in the past five months – and there’s no relief in sight for apartment hunters in the market’s busiest season.

The median rent on new leases signed in June was US$4,625, up 7.6 per cent from a year earlier and US$54 more than the previous month, according to appraiser Miller Samuel and brokerage Douglas Elliman.

Rents typically climb during the summer, but the pressure this year is intensified by the Fairness in Apartment Rental Expenses Act, which as at June bars landlords from imposing broker fees on their new tenants. Many experts warned that owners would instead roll the cost of those fees into annualised rents, and there are signs that’s already begun, according to Jonathan Miller, president of Miller Samuel.

“The reality is the landlord isn’t paying for broker commissions,” Miller said. “They are passing it off in a different way and are building in a rent increase going forward.”

On top of that, demand for rentals is expected to ramp up in the next couple of months as students and new graduates flock to the city, potentially driving prices even higher. Manhattan’s listing inventory shrunk 12 per cent in June from May, leaving fewer choices for apartment hunters.

In another sign of a fiercely competitive market, a quarter of new leases last month were signed after bidding wars, a record share for June, Miller said.

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Rents also rose in Brooklyn, where the median on new leases last month was US$3,733, up 1 per cent from a year earlier. And in Northwest Queens, including Astoria and Long Island City, the median jumped 11 per cent from a year earlier to US$3,600, but that was down US$25 from May.

Some New Yorkers squeezed by higher housing costs have put their hopes in mayoral candidate Zohran Mamdani, who cinched the Democratic nomination in part for his promises to freeze prices on rent-stabilised apartments. However, some industry observers worry about unintended consequences.

“When you freeze rent, you are not freezing inflation,” Miller said. “Real estate taxes rise, operating expenses rise. The first thing that goes is maintenance of buildings.” BLOOMBERG